Back to Glossary
Options are financial contracts that give you the right, but not the obligation, to buy or sell an asset at a set price by a certain date.
In Depth
Options are financial derivatives that derive their value from an underlying asset, like a stock. A 'call option' gives you the right to buy, while a 'put option' gives you the right to sell. You pay a premium to purchase an option. If the market moves favorably, you can profit, but if it doesn't, you only lose the premium paid.
Example
An investor might buy a call option on a stock if they believe its price will rise significantly before the option expires.